Yahoo earnings show progress under new CEO

Two weeks ago, 2,000 grim-faced Yahoo employees were holding pink slips. Today, the company reported profits have risen 28 percent. However, the company is still facing a rocky road.

The Sunnyvale search engine company saw revenue grow 1 percent in the past quarter. That's the first increase in almost four years. It made a profit of 23 cents a share, compared to 17 cents a year ago. Still, Yahoo has its challenges.

With the layoffs already under way, Yahoo is focusing on a major reorganization. It will keep services where it's already No. 1, such as news, finance and sports. But it's going to shed 50 others where it's not a leader.

Here's how CEO Scott Thompson put it on the quarterly earnings conference call: "What we will do is get clear on our core business, dedicate some of our best people and the most resources there and put our customers first."

Behind the scenes, however, Yahoo is still facing some major hurdles. Its largest shareholder, a hedge fund called Third Point, has launched a website to push a competing slate of directors for the Yahoo board.

And there's trouble brewing over the 2,000 layoffs two weeks ago. Ting Dibble was a Yahoo engineer for nearly seven years. When laid off, she was given a severance agreement that says she will get a retention bonus if she stays at Yahoo for two more months, plus cash for unvested stock options. Nine days later, she got a revised severance letter with those two benefits deleted.

"Being laid off is already a very harsh thing, and now you change the benefits. I think that's unprofessional," Dibble said. "I need a good reason for this."

The change will mean a loss of about three months pay, a financial blow for a mother of one with a second child on the way. When she complained, Yahoo sent her an email indicating hundreds more are also losing the benefits promised when laid off.

"They should handle it better if there was a mistake," Dibble said. "If it's not a mistake, I think taking away the benefits from the employees being laid off without any mistake or didn't do anything bad to the company, it's disturbing."

Dibble is consulting an attorney. Yahoo tells ABC7 it's possible a clerical error was made, but they can't talk about specific individuals and their situations.

Thompson did not talk about the layoffs at all, only about the future of the company during his earnings call.